Global pension funds warm to India’s solar power ambitions

Some of the world's largest pension funds, looking for long-term returns on green investments, are looking for deals in the solar energy sector in India, where Prime Minister Narendra Modi targets an investment Of $ 100 billion over the next five years.

Demand for electricity in the third largest economy in Asia is expected to increase as the economy grows and more and more people settle in the cities. India estimates that maximum electricity consumption will be more than quadrupled in the next two decades at 690 gigawatt (GW), which would require rapid growth in generation and transmission capacity.

This potential, aided by less costly solar equipment costs and government efforts to combat pollution, is attracting global investors, including Canada's major pension fund managers – the Pension Board (CPPIB), the Caisse de depot et de placement du Québec (CDPQ), and the Ontario Teachers' Pension Plan (OTPP).

Investors focus mainly on the production of solar energy, financing large-scale solar parks.

CDPQ, which has net assets of C $ 270.7 billion ($ 199 billion), says it plans to invest in the solar sector of India with Azure Power, a listed company New York with about 1 GW of solar capacity under different stages of development.

"We plan to do more with them. Our approach is to choose the right partner and build a platform that can be sustained for several years," said Anita George, South Asian CDPQ chief, 39 and it would not govern investing in other solar projects in the future.

Other international investors have already entered the renewable energy sector in India, such as Dutch fund manager APG, Brookfield Asset Management of Canada, private equity funds of Goldman Sachs, JPMorgan And Morgan Stanley and the European public services EDF, Engie and Enel.

APG Asset Management, which agreed last year to jointly invest $ 132 million with Piramal Indian companies in solar energy, is looking for more offers.

"We plan to be able to announce another investment in the Indian renewable energy sector in the coming months," said Hans-Martin Aerts, APG's infrastructure for Asia Pacific.

Alok Verma, a general manager of Kotak Investment Banking, who advised companies on renewable contracts, said he expects that 5 GW of solar energy can be added From next year, most of them being supported by foreign funds.

The production capacity of solar power in India has more than tripled in less than three years to more than 12 GW, aided by lower prices of modules and borrowing costs, and an order Of the government – but this is still only about 4% of the total power of approximately 315 GW.

China, the largest solar producer in the world, more than doubled its capacity last year to 77.42 GW.

Suyi Kim, Asia Pacific chief at CPPIB, Canada's largest retirement manager, said that solar power seems more attractive in India than wind power. "In India, I have the impression that solar energy seems to be more attractive, but it is on a case by case basis," she said.

India usually records more than 300 days of sunshine per year.

Kim refused to comment on any specific investment plan, but two people familiar with the developments said that the CPPIB was in the process of seeking offers.

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